SENATE

Political spotlight returns to Energy panel this week with votes on FERC nominees, KXL pipeline

Hannah Northey, E&E reporter

E&E Daily: Monday, June 16, 2014

The arcane but powerful Federal Energy Regulatory Commission will once again spark political conflagration this week as the Senate Energy and Natural Resources Committee casts its vote on Norman Bay, President Obama's second contentious pick in recent months to lead the agency.

The Senate committee Wednesday is scheduled to vote on Bay and the renomination of Cheryl LaFleur, the agency's acting chairwoman whose term expires this month, as well as a bill fast-tracking the stalled Keystone XL pipeline.

The confirmation vote arrives amid ongoing negotiations that have pitted Republicans and pro-energy Democrats hoping to keep LaFleur at the agency's helm against Senate Majority Leader Harry Reid (D-Nev.), who is staunchly backing Bay, a former prosecutor from New Mexico who now leads FERC's Office of Enforcement.

The high volume of jockeying over Bay and LaFleur following the downfall of former Colorado regulator Ron Binz last year highlights Capitol Hill's increasingly partisan focus on an independent agency tasked with overseeing an evolving and vulnerable electric-power system.

Fueling the resistance to both Binz and Bay are special interest groups like the pro-business Competitive Enterprise Institute that have attacked the nominees for backing renewables.

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"What's different about this is that it's so public," said former FERC Chairman James Hoecker. "It has the effect of making FERC look like a political pawn, that somehow these various interest groups can affect regulatory decisions ... based on who's confirmed. I think that's new."

FERC is currently tackling the issues of grid reliability amid growing concerns over physical and cyberattacks, more severe storms and resources shifts under new U.S. EPA rules, as well as environmental reviews of high-profile LNG export terminals and oversight of a maze of pipelines and infrastructure needed to tap the country's shale play.

Debates over the agency's leadership have peaked in recent months on and off Capitol Hill.

On the legal front, William Scherman, FERC's former general counsel and a partner with Gibson, Dunn & Crutcher LLP, has led criticism of the agency's enforcement division -- which Bay has headed since 2009 -- for handing out excessive fines. Scherman, notably, has represented a host of companies that have faced investigations or reached settlements with FERC, including a trading division of J.P Morgan.

Adding to the mix is Competitive Enterprise Institute, which took part in attacking Binz last year before he pulled his name for the nomination to be FERC chairman. William Yeatman, a senior fellow for CEI, in a blog last week questioned Bay's assertion that EPA's regulations, including the agency's Mercury and Air Toxics Standards, "will be manageable" for the power industry (E&E Daily, June 6).

But Republican energy lobbyist and strategist Mike McKenna blamed the political storm surrounding FERC on Reid's attempt at a "hostile takeover" of the agency.

"The reason why there's so much interest surrounding FERC is because you have an explicitly political chairman installed by the senator from his home state," McKenna said, referring to Jon Wellinghoff, the agency's most recent chairman, who had a long career in Nevada as an energy lawyer and regulator. "Now you have the same senator trying to install another political chairman."

Energy bills, nominees

The nominations and the vote on Louisiana Democrat Sen. Mary Landrieu's legislation to fast-track KXL will also play into the senator's tough re-election race against Rep. Bill Cassidy of Louisiana, the likely Republican nominee.

Cassidy last week called on ENR Chairwoman Landrieu in a letter to oppose Bay and expressed concerns about his lack of experience, warning that Bay could "rubber stamp" the White House's push for renewables over coal and natural gas (E&ENews PM, June 12).

The energy panel's vote on the KXL legislation is all but assured to come out in favor of the pipeline, with the chairwoman and Sen. Joe Manchin (D-W.Va.) on record in favor of ending the yearslong Obama administration vetting of the Canadian oil sands crude project. They'll join all the Republicans on the panel who are expected to vote for the measure, while the rest of the ENR Democrats are likely to oppose it.

But oil and gas interests, particularly those in Sen. Mark Udall's (D-Colo.) home state, will pay close attention as he casts an avowed "no" vote against ending a federal review process that he wants to see resolved "on the merits," as his spokesman put it last week.

Under a lesser degree of scrutiny will be retiring Sen. Tim Johnson (D-S.D.), who cast a nonbinding vote in favor of KXL last year but said last month that he would oppose a binding bid to tie the White House's hands on the pipeline.

For Landrieu's campaign, her stewardship of the KXL vote is likely to prove valuable in pushing back to charges from Cassidy and other critics that she is unable to fully leverage the power of the committee's gavel in support of her home state's interests.

But clearing committee does not ensure the pipeline a spot on the Senate floor, where Reid controls the agenda and lingering tension persists over Republicans' refusal to accept the majority leader's offer of a stand-alone KXL vote during an energy efficiency debate that ran aground last month.

Reclamation, USGS

The committee will also vote on Interior Department nominees to lead the Bureau of Reclamation and the U.S. Geological Survey.

Both nominees are expected to easily pass.

For Reclamation, the nation's largest water wholesaler and the West's second-largest producer of hydroelectric power, Obama selected Estevan López, an engineer by training who has spent the last decade as director of the New Mexico Interstate Stream Commission.

If confirmed, Lopez would replace Michael Connor, Interior's recently confirmed deputy secretary. Reclamation's top challenges include providing adequate water to Western communities and businesses amid withering drought and as climate change alters water regimes.

For USGS, one of the nation's premier science agencies, Obama selected current acting Director Suzette Kimball to head the agency.

Kimball, whose research background includes barrier islands and coastal ecosystems, has been with USGS since 1998 and is also currently Interior's chief scientific integrity officer.

"I believe we'll be able to report them from our committee soon" barring any unforeseen controversies, committee ranking member Lisa Murkowski (R-Alaska) said following the nominees' confirmation hearing last month.

But Murkowski also voiced concerns about USGS exhibiting "no small amount of mission creep," she said.

The panel is also scheduled to vote on a roster of bills to address a variety of water-related issues, including drought response in the West. The Subcommittee on Water and Power considered several of them earlier this year (E&E Daily, Feb. 24).

S. 2019, from Sen. Brian Schatz (D-Hawaii), would reauthorize and tweak the 2009 Secure Water Act and make activities related to drought planning and response eligible for grants.

H.R. 1963, from Rep. Steve Daines (R-Mont.), would smooth the path for irrigation districts and other nonfederal hydropower developers to build projects on 11 Reclamation canals, conduits and ditches. It passed in the House last year.

S. 1800, from Sen. John Barrasso (R-Wyo.), would require Reclamation to publicly report on its repair needs every other year.

S. 2010, also from Barrasso, would allow non-federal power development at Bureau of Reclamation-owned facilities.

S. 1946, from Sen. Ron Wyden (D-Ore.), would update the Reclamation Safety of Dams Act of 1978 by removing spending caps for construction projects to improve the safety of Reclamation dams.

S. 1965, from former Sen. Max Baucus (D-Mont.), to amend the East Bench Irrigation District Water Contract Extension Act to permit the secretary of the Interior to extend the contract for certain water services.